International Business Machines (NYSE:IBM – Get Free Report) and Infosys (NYSE:INFY – Get Free Report) are both large-cap technology companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.
Volatility & Risk
International Business Machines has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Infosys has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500.
Analyst Ratings
This is a breakdown of recent recommendations for International Business Machines and Infosys, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| International Business Machines | 2 | 12 | 20 | 0 | 2.53 |
| Infosys | 1 | 10 | 0 | 0 | 1.91 |
International Business Machines currently has a consensus target price of $266.12, indicating a potential upside of 4.09%. Infosys has a consensus target price of $11.45, indicating a potential downside of 8.70%. Given International Business Machines’ stronger consensus rating and higher possible upside, equities analysts clearly believe International Business Machines is more favorable than Infosys.
Dividends
International Business Machines pays an annual dividend of $6.76 per share and has a dividend yield of 2.6%. Infosys pays an annual dividend of $0.45 per share and has a dividend yield of 3.6%. International Business Machines pays out 57.6% of its earnings in the form of a dividend. Infosys pays out 55.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. International Business Machines has increased its dividend for 30 consecutive years. Infosys is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares International Business Machines and Infosys”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| International Business Machines | $67.53 billion | 3.58 | $10.59 billion | $11.73 | 21.80 |
| Infosys | $20.16 billion | 2.52 | $3.31 billion | $0.81 | 15.49 |
International Business Machines has higher revenue and earnings than Infosys. Infosys is trading at a lower price-to-earnings ratio than International Business Machines, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares International Business Machines and Infosys’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| International Business Machines | 15.99% | 34.37% | 7.63% |
| Infosys | 16.21% | 35.52% | 20.98% |
Institutional & Insider Ownership
59.0% of International Business Machines shares are held by institutional investors. Comparatively, 16.2% of Infosys shares are held by institutional investors. 0.3% of International Business Machines shares are held by company insiders. Comparatively, 22.4% of Infosys shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Summary
International Business Machines beats Infosys on 10 of the 17 factors compared between the two stocks.
About International Business Machines
International Business Machines Corporation, together with its subsidiaries, provides integrated solutions and services worldwide. The company operates through Software, Consulting, Infrastructure, and Financing segments. The Software segment offers a hybrid cloud and AI platforms that allows clients to realize their digital and AI transformations across the applications, data, and environments in which they operate. The Consulting segment focuses on skills integration for strategy, experience, technology, and operations by domain and industry. The Infrastructure segment provides on-premises and cloud based server, and storage solutions, as well as life-cycle services for hybrid cloud infrastructure deployment. The Financing segment offers client and commercial financing, facilitates IBM clients’ acquisition of hardware, software, and services. The company has a strategic partnership to various companies including hyperscalers, service providers, global system integrators, and software and hardware vendors that includes Adobe, Amazon Web services, Microsoft, Oracle, Salesforce, Samsung Electronics and SAP, and others. The company was formerly known as Computing-Tabulating-Recording Co. International Business Machines Corporation was incorporated in 1911 and is headquartered in Armonk, New York.
About Infosys
Infosys Ltd. is a digital services and consulting company, which engages in the provision of end-to-end business solutions. It operates through the following segments: Financial Services, Retail, Communication, Energy, Utilities, Resources, and Services, Manufacturing, Hi-Tech, Life Sciences, and All Other. The company was founded by Dinesh Krishnan Swamy, Senapathy Gopalakrishnan, Narayana Ramarao Nagavara Murthy, Raghavan N. S., Ashok Arora, Nandan M. Nilekani, and S. D. Shibulal on July 2, 1981 and is headquartered in Bangalore, India.
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